29 F. 496 -

29 F1d 496

Case Text

FEDERAL REPORTER·.

LEWIS,

Jr.,

l1:'N':fuW ENGLAND FIRE

INs. Co.

FEJIl-SIHPLllI .

«(ftrouitQourt.p:

:lNStmANClll....,. POLICY ..

-

December 29, 1886.)

SOLE,

UNOONDITIONAL

NOT PASSED.

Appl'icy-holder Who holds the property insured under a contract for its sale and conveyance to him by the owner in fee-simple by deed of quitclaim; on payment of the purchase money named therein, and who has fully paid the purcl1ase m(),ney, but has .not yet, received the deed, is the sole,uncoilditional, and fee-simple owner of the prOperty, within the meaning of the usual Con'dition.in insurance' policies,.rendering the policy void in case the assured is not Il;1ld uncpnditiqpal owner of the property insured, and owns it in at law.

This iean action on afire insurance policy in which the defendant, on various conditions,' insured. the plaintiff against loss by' fire· or IiglHning on his, steamSRW and stave mill. The policy was to beeomevoid'if, among othe:dbings, the assured was not the sole and unconditional owner ·of the' property, or if any building ·intended to be insured stood/on' ground not; owned in fee-simple by the assured, or if the interest of the l1ssured was not truly stated in the policy, unless consent in writing' should be indorsed by the company thereon.. The defendant has, by plea, 'set out these conditions, and alleged, in substance, that theplaintiff;had no title or right to the property insured, or the ground 'on which it stood, except by virtue ofacontract in writing.between him and the owner of the property in .fee-simple, signed' by both, by which the owner agreed to. sell,. transfer, and convey by deed of quitc1aiut to the plaintiff all the property in consideration of the full and completepayrnent of three notes of the plaintiff described, possession of the property, and full payment of the notes by the plaintiff, with failure to deliver the deed, without fault or neglect of the plaiutiff. To this plea the plaintiff' has demurred, and the cause has now been heard on this demurrer. The questicin raised by this demurrer is whether, on thesefacts,theplaintiff became sole and unconditional owner of the property irisured,'andthe ,owner in fee-simple of the landt. If he did not, as there was no consent in writing on the policy, it was by its terms void·. ACbording to theseallegations,the plaintiff had bought the property, including the land, of the owner in for it, and got it. There was no condition about the manner of his acquiring it, by which he ('ould: ,be disturbed in.hisipossession and enjoyment Mit. No one .is shown to have any color of claim whatever .but the holder of the pri01'legaVtitle; and hahad left in him the bare record ,title without ownarship.' In equity theplaintiffcQuld successfully resist any attempt on his.,part,·bylegaltproeeemngs or entry, to· deprive. the plaintiff of the property or land, or of their 'possession. The plaintiff'so had and held
WHl1:EY,ER,

J.

LEWIS

v. ,NEW

ENGLAND FIRE INS. CO.

497

the property that he could defend his right to and possession of it against all the world. This is nothing-less than solband unconditional ownership. By the terms of, the contract, the property, including the land, was to be conveyed to the plaintiff. This would signify that the whole interest in the whole was to ,be conveyed, and the contract could not be answered by the conveyance of a mere life-estate, leaVing, the remainder mhim '\Tho had agreed to convey the whole.. Nothing short of a deed to the plaintiff and his heirs would be a fuUillment. The plaintiff th!lrefore held the whole for ,his heirs, and his heirs, forever, all of whom areJ,ncluded within himself, as well as for .His estate would descend to his heirs, and' it. was the whole interest' in the land and property. , "Tenant iIi is he which hath lands or tenements, to hold to him and his heirs, forever." Litt. § 1; Co. Utt. 1a.. The title by which they are held is immaterial. The description is answered if he hath them to so hold. The estate in the land, and the title by which the estate is held, are distinct from each other. 1 Washb. Real Prop. c. 3,pl. 4. By statute in Massachusetts a person, "having an estate of inheriti\bce or freehold in any town," with certain conditions, gained a that town. It was held that a mere equitable estate resting on a; bond for a deed was sufficient to give a settlement under this statute.. ,'Cfrleana v. Ohatham, 2 Pick. 29; Scituate v. Hanover, 16 Pick. 222. And a personoocupying land without title, but whose possession 'Was pr9.te,cted by the statute of limitations only, was held to have an estate'of inheritance so as to gain a settlement if the other conditions BrfM8terv. Demnis, 21 Pick. 233. Vermont a paupeds n'ofremov!1ble from his freehold, and a mere equitable freehold is sufficient to pl,'event removal. Walden v. Cabot, 25 Vt. 522. The object of these and similar conditions in this and like policies is to sure that the person seeking insurance is the real and substantial owner of the property, or interest in it, on which he intends to obtain insurance, and thereby to prevent wagering policies and fraudulent losses. The state of the title otherwise than in this view is not material. Therefore, in actions on policies of insurance, the person having the whole interest, has heen held to be the true owner. Hough v. insurance 00., 2BConn.10; Basket Co. v. Insurance Cb., 3 Hughes, 251; PranklinFirelnsurance Co;v. Crockett, 7 Lea, 725, Gaylord v. Insnrance 00.,40 Mo. 13; Pelton v. Insnra11ce Co., 77 N. Y. 605; lmn!ranceCV. v. Simons, 96 Pa. St. 527; Oha8e v. Insurance Co., 22 Barb. 535; Insurance Co. v. J)Oitghe'tty, 102 Pa. S1. 568; Insurance Cb. v. Havem, 95 U. S. 242; Carrigan v.InBU'rance Co., 53 Vt. 418. The cases cited in behalfofthe defendant do not appear to be to the contl'\1ty. In CVlnmbia,n Ins. CV. v. Lawremce, 2 Pet. 42, and Smith v. Insurance Cb;, 6Cush. 448, the condition of the bond fof'Q·deed to the had not been complied with. These are the most directly in point of any that have been noticed. ,Demurrer sustained. Plea adjudged insufficient. ·V.29F.Iio.1l-3-2

li'laintiffs, bankers, defendants, other 'bankers, certain. g2 v ernJl,lent bonds as a special deposit.. They afterwards asked defendants to disQount for them up to par of.the bonds as collateral." On this loan being paid,'defendants asked what they should do with the collaterals, and, being directed hold them as formerly,for plaintiffs' use, replied, "We hold $12,000 U. S, 4:%, as special deposit;" and'that the)' held them. subject to plaintiffs' 'further' orders. The two banks were in unlDterrupted business relation for 10 years, The plaintiffs informed defendants that they wished, from time to time, to' overdJ,"aw their account on the security of these bonds as collaterals, &I\d time to time, made overdrafts on defendants, which were paid. 'The bonds were afterwards stblen, by defendants' assistant cashier, Held,defendants' liability was thl1t of pledgees"
In. this case it was shown that bonds were kept in the "treasury" psrt of defendants' bank safe, where the securities and, reserve or surplus 'funds, not in active use, were kept, that Ker, the. defaulting assistant cashier, bad access,therelp; that defendll,llts examined their cash and counted their securities eVllry month, and their special deposits twice a year, to see that they'corresponded WIth the amounts marked on the envelopes, and were otherwise, correct; ..thllt,the collateralsand special deposits were kept together; that no record of the Dumber of bonds held on specialdepo!\it was kept, and 'they could not be counted and checked off,' More than a year before Ker' fled; defendants wer&' warned that some one in their bank.was speculating on the board of trade,., q£. which Ker was. accused", and admitted the fact, /tndon promising hot to dos,o again, was retained in his position. Two months before Rer fled, defendants were again warned, and commenced an examination of their books and securities, but made no effort to see whether the special deposits were disturbed, because, as no record was l,apt of them.bynUIubers or otherwise, although the numbers of plaintiffs' bondsclid appear on defendants' bond register,'having been sold by them to plaintiffS. . Held,' de.fendan,t,8.w,',ere guilty of gross negl.igence. i.n not .diSclrarging Ker, or placing him in a position of less responsibility, and were liable for bonds belonging to plaintiffs, stolen by him, whether such were held \)y them at law or special deposit,
'

2 SAHE77DJPII'AULTING CASlUER-WARNmGS-GRoss NEGLIGENCE. ' .

At Law., H. Jack$Dn and Robert Hervey, for plaintiffs. John P.Wil8Dn ,and O. H. Horton, for defendants.
GRESH4M, J. ,The plaintiffs, who were bankers at Marysville, Mis· .souri, opened an account in 187,3 with the defendants, who were bankers at Chicago, and this relation continued until the spring of 1883. Interest' was allowed the plaintiffs on their deposits above a certain amount, at the rate of 2! and 3 per cent. per annum, and the deposits averaged Jrom $200,000 to $400,0001\ year, On July 7, 1880, the defendants "sold to the plaintiffs $12,000 of4 per cent. government bonds, for which the latterpaid,including premium and accrued interest, $13,005. The letter which the plaintiffs wrote ordering the purchase concluded thus: "You will please send us description and numbers of the bonds, and hold same as special. deposit for us." In the account which the defendants rendered to the plaintiffs of the purchase, the latter were informed